After matching 140 million Chinese singles, Zhenai’s founder sets sights on marrying AI to blockchain
Li Song says he doesn’t like that a few internet giants monopolise data and traffic, which is detrimental to entrepreneurship, and is eager to see decentralised applications
Li Song has the qualities of a textbook serial entrepreneur: he loves talking about ideas, is capable of putting them into action, knows how to pivot when things don’t pan out and has a huge appetite for risk. That appetite for risk has paid handsome dividends.
In November last year, he sold a controlling stake in his online matchmaking business, Zhenai.com, to PAG Asia Capital, one of Asia’s largest private equity firms, and now he’s looking forward to his next big thing.
“Life’s a journey, I’ve given more than a decade of my life to Zhenai and now I’d like to try something different,” says Li.
Born in a suburb of Shanghai, Li trained as a molecular biologist at Cornell University and, after realising that fiddling with Petri dishes in a lab wasn’t his thing, switched to Columbia University, where he earned a PhD in finance. After years working as a senior investment banker in the US and Hong Kong, he fulfilled a lifelong dream to run his own business.
Zhenai, which translates as “true love”, was his second venture after MeMeStar, a short message-based chat forum that was sold to the Chinese web portal Sina. Following a year of “gardening leave”, he set up a music sharing company that was eventually transformed into Zhenai.com.
Li founded Zhenai in 2005, but it wasn’t until 2008 that it started to take off. He attributes the success that followed to the rapid adoption of smartphones. He recalls long management meetings to discuss whether to spend the advertising budget on the website or the mobile app or to split it between the two. He was undecided until one day he happened to take the Hong Kong MTR, breaking from his usual routine, and he was surprised to see that everyone around him was glued to their smartphones.
“I realised this has to be the trend. I got off the train and called my chief operating officer and said, ‘The debate is over. I don’t care if we have to spend extra money, just do it.’ I’m glad we did because otherwise we would have missed it and the company wouldn’t have survived,” says Li.
Smartphones were an ideal tool in the dating game – not only could users specify the type of person they wanted to meet, but the mobile devices meant they could get information about prospective dates fast.
Zhenai.com has more than 120 million registered users, and new users join the dating platform at a rate of 40,000 to 50,000 a day. Little wonder the company was an attractive prospect for a buy out.
Li is now a minority shareholder and will remain on the board. Since he stopped running the company, his daily routine – once his wife, a venture capitalist, has left for the office and his sons have gone to school – is to go to for a swim.
“I just need to leave home to pretend I’ve got something to do. I take my laptop, attend a class and then read market research reports – that’s how you come up with ideas, you study what’s going on around the globe,” says Li.
He’s also taking an online fintech course offered by Oxford University, and when that finishes, plans to take another on blockchain.
“The reason I attend these classes is because I want to see the forest. If I’m going to get into a new industry I want to have broad exposure first and see the entire value chain. Besides, after working non-stop for 20 years it’s nice to have a break,” says Li.
He’s still some way off knowing exactly what his next business will be, but he’s confident it will be related to two key emerging technologies – artificial intelligence and blockchain. An AI blockchain-powered fintech company is especially appealing and he is eager to see decentralised applications.
“I don’t like the current status that you have a small number of internet giants monopolising data and traffic, which is really bad for entrepreneurship because they can jack up media price over time which makes customer acquisition costs prohibitively high,” says Li.
He’s confident that we will see applications on decentralised platforms in the future – it’s just a question of when. Is it a risky venture? Yes, but that’s what he finds so exciting.
“That’s what tech entrepreneurship is all about – you take a big risk in doing something that is not in good shape yet,” says Li.
There’s little doubt that Li is a certified risk-taker – he walked away from a lucrative job at Morgan Stanley to start his own business.
“Most entrepreneurs overestimate their own abilities, they overestimate the odds of success. You almost have to be a bit ignorant of the kind of risk you are taking,” he says.
And it’s this key quality, he says, that often determines who initiates new ventures and who chooses to be an employee rather than set up their own company.
“You have a lot of people who are very capable, but are risk averse. Appetite for risk doesn’t have anything to do – as it turns out – with your ability,” he says.
If this is beginning to sound a little bit philosophical that’s because one of Li’s great passions is psychology – he’s been reading psychology books in his free time for many years.
Another key quality of the successful entrepreneur is flexibility, he says. Those who create a plan for a new venture and then follow it through rigidly, unwilling to alter it, often end in failure.
If the original idea doesn’t pan out, come up with another one and go back to your investors and break the bad news and then buy them up with your revised idea.
“You have to be flexible and emotionally you have to be tough. And you have to be brutally honest with yourself about your idea. If the market really tells you no one wants your product you should be flexible enough to change, to pivot,” he says.
This is what he did when he when his second venture, the music sharing company, didn’t pan out the way he hoped. He noticed that people were going online not just to share music, but also to chat and realised that what many of his users wanted was a platform where they could meet other singles.
Fast emerging technologies mean that it’s even more important to be flexible and seize the opportunity to pivot when the opportunity arises. If someone starts a business on an existing tech platform and some time into the project discovers that a new platform has emerged, they typically begin by telling themselves it’s just a fad.
By the time they decide to get rid of their legacy system in favour of the new one they’ve often missed the boat.
But what does the former investment banker actually know about blockchain, AI and the emerging tech platforms? Li is the first to admit it’s insufficient, but it doesn’t matter because he plans to hire people who do know the mechanics of the emerging technologies.
His favourite hunting ground for tech partners is tech conferences. His standard strategy is to approach a speaker whose presentation has impressed him and ask them if they are the one of the co-founders of the firm. If they are he walks away, but if they aren’t he suggests lunch.
“I don’t know anything about engineering or computer science, but it doesn’t matter. You only need to focus on business idea, find the people with the relevant skills to join you and then focus on the management side and sales, which I’m very good at,” says Li.
He honed his sales skills early in his career, selling derivative products at Morgan Stanley. He has used those same salesmanship skills to not only persuade top talent to join him, but also to persuade people to provide seed capital. But talking people into lending him money and investing in a new project is not such an issue these days because PAG’s acquisition of a controlling stake in Zhenai has left him sitting very pretty.
“I have no fear for failure any more because I’m financially well off – I’ve made more money than I ever dreamed of,” says Li.
If it’s not money that’s driving Li these days, then what is? His passion for technological entrepreneurship, he says.
“I find the process a very exciting way of living – you dream up some idea, you plan it and organise a team and then watch it grow into a mature company.”
(The full version of this article is published in the May issue of The Peak magazine, available at selected bookstores)